Five years have passed since IAS 41, Agriculture, introduced fair value accounting for standing timber and use of the standard is now widespread globally. Nevertheless, amongst preparers there are major questions about how the standard is being applied to forest assets. Fair value implies a market based value and whilst there are markets around the world for the harvested products of forest, markets for standing timber are limited in comparison with the total volume of standing forest. This study reviews how fair value is being applied by forest owning companies using IFRS. It aims to provide insight into the key judgments that are made by preparers from around the world and highlights some of the difficulties as well as similarities and differences.

What is the importance of this study at this time?

The application of IAS 41 and the valuation of forest assets are of increasing importance to preparers and investors throughout the world:

Preparers and investors have expressed interest in the manner in which IAS 41 has been implemented.

The forthcoming implementation of IFRS in various regions with major commercial forestry activities, such as the United States, Canada and Brazil, also calls for this study.

Institutional investors are becoming increasingly attracted to forestland as an asset class, seeing such assets as offering an alternative and sustainable long-term investment strategy.

Forestry is attracting new strategic investor interest as wood-based biomass is seen as a vital renewable energy resource.